The cryptocurrency industry saw a veritable flood of ICOs during the cryptocurrency bull run in 2017 and extending into 2018. However, far from all of these led to creating successful cryptocurrency ventures. Moreover, a large portion of their market value have also been erased following the market downturn.
ICO team-controlled holdings worth over $80 billion at one point
Now, a recent report from BitMEX is trying to outline what exactly has happened to most of these ICO funds. In collaboration with TokenAnalyst, BitMEX has examined ICO token treasury balances on the Ethereum network, and reached some interesting conclusions.
First and foremost, the report has found that all the ICO team-controlled holdings examined had been worth a cumulative $24.2 billion upon issuance. It is worth pausing and comprehending this massive number for a moment. This represents more than 20% of the total current cryptocurrency market capitalization, which sits at $121.7 billion.
Nevertheless, the report notes that liquidity was too low for this massive amount – $24.2 billion – to ever be realized. Moreover, the value has fallen sharply to a current valuation of around $5 billion.
This reduction in value reportedly mostly stems from the negative market sentiment during practically all of 2018. In fact, the peak valuation of ICO team holdings is reported to have been over $80 billion.
Founders more likely to benefit from ICOs than investors
As such, more than a whopping $70 billion might have been lost – if measured from the ICO assets’ top valuations. Nonetheless, such a loss is likely only theoretical in nature – as the report points to lack of liquidity as preventing a practical $80 billion valuation.
The report also notes that a $1.5 billion loss of value is done to transfers away from team-controlled address clusters – which it theorizes is ”possibly disposals.” However, it goes on to highlight that this might be an overestimate, as there are many possible reasons coins could leave these address clusters.
In conclusion, the report finds that ICO teams likely profit from their token issuances though issuing tokens to themselves, and selling newly issued tokens.
If BitMIX’s and TokenAnalyst’s calculations are correct, this would mean ICO teams have profited by nearly $13 billion from ICOs.
As such, ICOs in general would appear to profit founders rather than investors. It remains to be seen if this conclusion will have any lasting effect on ICO activity, which currently seems to have died down somewhat.
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Rasmus Pihl is a writer for Toshi Times by day and an avid follower of the blockchain industry by night. Rasmus holds a Bachelor’s Degree in Marketing from the Gothenburg School of Business, Economics, and Law and runs a Swedish marketing consulting firm. Moreover, when he isn’t writing for Toshi Times, traveling, working or changing the world in some other capacity, Rasmus is more than likely caught up in postgraduate studies.